Professional Documents
Culture Documents
Planning
& Facility Location
Capacity planning
Wiley 2010
Measuring Capacity
Examples
Type of Business
Input Measures of
Capacity
Output Measures
of Capacity
Car manufacturer
Labor hours
Hospital
Available beds
Pizza parlor
Labor hours
Retail store
Floor space in
square feet
Wiley 2010
Measuring Available
Capacity
Design capacity:
Effective capacity:
Measuring Effectiveness of
Capacity Use
Measures effectiveness
Use either effective or design
capacity in denominator
Wiley 2010
Utilization effective
actual output
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(100%) (100%) 140%
effective capacity
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actual output
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Utilization design
(100%) (100%) 93%
design capacity
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Capacity Considerations
Diseconomies of Scale:
Wiley 2010
Other Capacity
Considerations
Focused factories:
Subcontractor networks:
2.
3.
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Identifying capacity
requirements
Forecasting Capacity:
Capacity cushions
Strategic Implications
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Could do nothing,
expand large now (may included capacity
cushion), or
expand small now with option to add later
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Decision trees
Diagramming technique which uses
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Location Analysis
Facility location is the process of
identifying the best geographic location for a
service or production facility.
Factors affecting location Decisions are:
Proximity to source of supply:
Proximity to customers:
Proximity to labor:
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Community considerations:
Site considerations:
Quality-of-life issues:
Other considerations:
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Globalization
Should Firm Go Global?
Globalization is the process of locating
Potential disadvantages:
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Multiply by the number of loads between each site and the four
cities
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Xc.g.
lX
l
i
325
7.9 ; Yc.g.
41
l Y
l
i
436
10.6
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Break-Even Analysis
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Break-Even Analysis
Total revenue = pQ
Break-even is where Total Revenue = Total Cost
Q = F/(p-c)
Q = break-even quantity
p = price/unit
c = variable cost/unit
F = fixed cost
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Chapter 9 Highlights
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